Influence Peddlers

"Three months into this project, the client canceled the contract with both the vendor and [another] consulting firm," says DataVox CEO Sluzewski.

Sluzewski shares this story to illustrate his growing influence as a solution provider. "Neither the vendor nor the consulting firm could deliver on the stated goals, and they had trouble coordinating their efforts. The project got bogged down in finger-pointing. That's when we got a call, and the client brought us back in to deliver the goods."

Although their roles have evolved during the past few years and will continue to change, VARs will remain influential in purchases. That's true in good economies and bad. But VARs of different sizes have different spheres of influence, and as many evolve their product lines and focus on services, the nature of their influence also changes.

Forrest Gump would say, "Influence is as influence does." That means VARs become influential by becoming experts in their fields and gain street credibility by demonstrating an understanding of particular markets and business opportunities.

Take Expanets as an example. The Englewood, Colo.-based company, which had revenue last year of more than $700 million and was No. 68 on our 2003 VARBusiness 500 ranking of top solution providers, is one of the largest providers of Voice-over-IP systems. It has specialized in three vendors--Avaya, Cisco and NEC--and has found that as the company develops its engineering expertise, "it has allowed us greater influence on our clients' design and purchasing decisions," says president Chris Younger.

Expanets has stayed influential by adding to its expertise and obtaining the top level of certification from each of the three key vendors it represents.

"We are a Platinum-certified Avaya Business Partner, a Cisco Gold-certified partner with IP telephony and security specializations, and NEC's largest independent solution provider, consistently receiving its highest awards for engineering excellence," Younger says.

Pick Your Battles
Clearly, that strategy works for any number of VARs. To be influential means you have to know what you are talking about, and the most obvious way to demonstrate that is by racking up a number of vendor certifications and sending your team to the various vendor-supplied training courses.

But there are other less obvious and just as important ways to gather and exert influence. Indeed, the influence landscape is a complex one, with differences in how decisions get made in terms of the type of product and the size of the VAR involved.

For VARBusiness' 2004 State of the Market survey, we found the size of the solution-provider organization itself makes a big difference in how it curries its influence in the sales of its gear. For example, according to our results, 55 percent of small firms specify and influence peripherals, whereas only 44 percent of large solution providers do so. Likewise, 46 percent of small VARs specify or influence accessories, compared with just 36 percent of larger VARs.

Peripherals can be widely interpreted, and often the most influential VARs are those that can bundle the right mix of ancillary products into a particular sale. DataVox, for example, has been progressively shifting from commodity products to those that are specialty or niche products, such as wireless security and Microsoft services-management tools, Sluzewski says.

"In those products, we find our influence to be stronger given the high degree of expertise required," he says.

Sometimes what is considered a peripheral can vary. It could be an accessory to a major system, or it could be peripheral to the overall business the solution provider is actually engaged in, as OpenDemand, a 10-person Web-test and measurement VAR based in Newark, N.J., found out. OpenDemand was called in to evaluate the Web site of a gaming company running on two Compaq servers with Windows 2000.

"Upon our recommendation, the customer purchased two additional Compaq servers and upgraded the RAM from 512 MB to 2 GB in each one," says Donald Doane, president of OpenDemand. "Plus, they acquired new software licenses for ColdFusion and SQL Server and upgraded their Internet connection to a full T-1, along with using our recommended systems integrator to do all the configuration work and tuning of the company."

Now that's influence--moving outward from the immediate task at hand (how the Web site is functioning) to upgrading an entire computing infrastructure for that particular application. Just think about the collateral influence involved, from running a Web server (which happened to be Microsoft's IIS) to improving a database server, application server and Internet connectivity, and doubling overall computing server hardware as well.

As for larger firms, our survey found they carry more weight in terms of increasing their influencing activity in storage. The spread there was almost 20 percentage points between the smallest (46 percent) and largest companies (65 percent). Midsize firms fell in between at 56 percent.

Substance Counts
But size doesn't always matter; the type of firm, the makeup of its consulting staff and its level of expertise is ultimately where influence can be seen. In addition, in both our survey and discussions with key VAR contacts, many agree the influence model is moving from one based on products to one based on services.

"Our customers seldom, if ever, accept our recommendations as gospel," Sluzewski says. "Customers usually shop around for many technology products, especially PC hardware."

That, however, doesn't necessarily hold true for noncommodity professional services. There, our survey shows that larger VARs carried more weight, with the percentage specifying professional services in midsize (68 percent) and large firms (66 percent) being about 10 points higher than smaller VARs (57 percent). Midsize VARs are also more likely to see an increase in their influence in professional services, with 70 percent of respondents compared with 60 percent of the smaller VARs.

"We are seeing a shift toward disaster-recovery planning, network-management design and security design with our engagements," Sluzewski says. "Our customers tend to accept our recommendations and advisory services more readily in these professional services offerings. This is because we have already been scrutinized as part of the overall selection process for that particular engagement."

What does matter is being able to service your customers and understand their business needs. Sometimes the best way to garner influence is in understanding your own limitations and being able to pick the right partners to work with so that the combination is compelling.

Doane says it best: "By adding systems integrators that are focused along specific industry verticals, we are able to more easily demonstrate to the customer that we understand their specific business needs and can make recommendations that are closely aligned with those needs."

No matter what size firm you are--or hope to be--gathering and exerting influence is an important goal. The moral of the story? While there are many different approaches to take, VARs need to understand the mechanics and execute carefully.